The Eagle's View

Due to the recent "foreclosure crisis" real estate appraisers are under tight control by the lenders that hire them. Some people, including the Colorado Real Estate Commission, feel that appraisers are to blame for recent over-valuations of homes where the owner now owes more than the home is worth. Gee, could it also be that the market has softened and home values have depreciated in some areas?

I'm sure there are cases where an appraiser deliberately over-valuated a home just to make the deal go through. The really evil appraisers are the ones who added tens of thousands of dollars to the price of the home with the knowledge that the buyer would get a instant equity line of credit or use the high price estimate to get 100% financing, but those somewhat rare occurrences are hurting everyone!

Some real estate agents believe that a home's price is "what the market will bear" and to some extent that's true. A home in an area that doesn't have many sales and might be considered highly desirable should sell for what people are willing to pay for it. But when a lender is required to finance the deal, they want to see comparable sales within about a 1 mile radius that sold within the past 6 months to justify the amount of money they are going to lend. Sometimes that's just not possible and in those situations the appraiser can go outside of the immediate area and add some value for the location. But when they do that the underwriter of the loan will want to know exactly why.

Appraisers must use data from the past and Realtors tend to price homes based on the present demand (hopefully not the future but that does happen). If I have a listing that gets a lot of showing traffic and an offer within a fairly short amount of time, does that mean the value of the home isn't what we listed at? The market demand is certainly there, but because there weren't any previous recent sales in the area, an appraiser might not be able to justify the price.

How is that fair or "right"? It isn't. Plain and simple, lenders need to understand that past sales aren't always the best way to place a value on a home. There's a reason appraisers visit the home instead of just looking at the stats on a computer. And there's an intangible in the real estate market called "demand" that cannot be measured by looking at past sales when the supply is so low that an apple-to-apple comparison cannot be made within the 6 month and 1 mile radius rule.

On May 1, application was made with the City of Littleton to plat the property located at 7400 S. Broadway which is at the northeast corner of S. Broadway and East Dry Creek Road and was formerly owned by Marathon Oil Company. The 77-acre site was rezoned in March 2006 to allow a mixed use development. The application is under review.

This is a vital step in the future of this new community. I can't wait to begin selling homes at Littleton Village. I've driven by this site nearly every day since 1988 when I was a student at Heritage High School. While the traffic congession at the corner of Dry Creek and Broadway is something that don't want to see, I think this neighborhood will finally add something to the area that's been lacking...NEW HOMES! If you want to know more about Littleton Village, be sure to contact me.

Labels: Littleton Village